On March 20, 2024, a new law goes into effect which significantly modifies the New York Property Condition Disclosure Statement (PCDS) which replaces and modifies a law that has been on the books since 2002.  This law, which applies to sales of residential real estate, arms buyers of residential property with more information about various aspects of a property.  (Note, residential real estate means a 1-4 family dwelling used or intended to be used as a residence; unimproved land, condos, coops and HOA sales are not covered.)

For example, several new questions or categories related to the property’s flood condition are added to the disclosure process.  Property sellers will be obligated to disclose whether the property is in a FEMA-designated 100-year or 500-year floodplain, whether it is obligated to comply with federal flood insurance requirements, and if the property has any history of procurement of flood insurance.  Additional areas of concern to be dealt with are the home’s history of indoor mold and structural and mechanical systems.  The questions require more or less “yes” or “no” answers.

It should also be noted that the PCDS is not a warranty of any kind by the seller or its agent, and it is not a substitute for any inspections or tests that the buyer may want to conduct on its own or by hiring an independent professional.  Nor is it a substitute for a title investigation by a licensed title company.

Previously, the PCDS could be exempted or basically ignored by a seller if the seller gave the buyer a credit of $500 in place of completing and delivering a PCDS.  This provision has now been eliminated.  The PCDS is thus mandatory and cannot be avoided, except in very limited situations.  One such exemption is that the sale of a residence by the estate of a deceased owner is exempted from the delivery of a PCDS.

Real estate brokers holding the listing are required to notify the seller of this obligation to provide the PCDS to potential buyers and the buyer’s broker must tell the buyer of their right to receive the disclosure.

There appears to be no obligation for the attorney to ensure that the PCDS is accurately completed.  Nor does there appear to be a provision prohibiting waiver of the obligation.  Another interesting question may be whether a seller should engage its own home inspection report to facilitate its completion of the PCDS, and then use that and the PCDS as a marketing tool to facilitate a smoother sales process.

One thing is sure, questions will arise as the new law is implemented in the marketplace.